Central Hudson Gas and Electricity Corporation

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Central Hudson Gas and Electricity Corporation

284 Robert Speck Parkway
Poughkeepsie, New York 12601-4879
U.S.A.
(914) 452-2000
Fax: (914) 486-5894

Public Company
Incorporated: 1926
Employees: 1,388
Revenues: $4.95 million

During its long history, Central Hudson Gas and Electric Corporation has played a major role in the development of the Mid-Hudson Valley region of New York State. Today, Central Hudson has pervasive influence on the region, serving a 2,600 square mile area that includes all or parts of eight counties and a population of over 626,000. The corporation provides gas and electricity to a diverse clientele that includes manufacturing industries, research firms, farms, government agencies, public and private institutions, resorts, and wholesale and retail operations. Its peak load is more than 770,000 kilowatts, and it has a system capability of nearly one million kilowatts.

This a far cry from the corporation’s modest beginnings in 1900, when the combined load of all Mid-Valley electric plants was no more than 3,000 kilowatts. In November of that year, Central Hudson was officially founded when Newburgh’s two gas and electric companies, Newburgh Gas Company and Consolidated Gas, Electric, Light, Heat and Power Company, merged to become the Newburgh Light, Heat and Power Company.

Instrumental in founding the fledgling company were three ambitious entrepreneurs—John L. Wilkie, his close friend William K. Beal, and Real’s son Thaddeus—who saw the lucrative opportunities that the chaotic nature of the early electric industry offered. Born in New York City, Wilkie was a lawyer in the city before being involved with the Reals in developing the Central Hudson system. From 1900 until his death, Wilkie served in various capacities with the utility, including vice president, general counsel, and chairman of the board of directors, a position he held from 1932 until his death.

William Beal, who was born in Newark, and son Thaddeus, who was born in New York City, began working together in the gas business in the early 1890s for a company known as The Consolidated Gas Company. The father sold his interest in the company when he saw the bright opportunities in the gas and electric business in the Newburgh area. William Beal became president of Newburgh Light, Heat and Power Company and Thaddeus became the general manager.

Like other enterprising individuals around the country, Wilkie and the Beals saw that if the company could establish what today is known as a franchise, there would be no need to undertake the expense of duplicating lines. If independent systems could be connected together by transmission lines, then one generating unit could replace an out-of-service unit from the second system.

Success came quickly to the entrepreneurs. In 1902 the Beals and Wilkie undertook a number of consolidations throughout the Mid-Hudson Valley region and founded the Poughkeepsie Light, Heat and Power Company. By 1911 the partners consolidated the three major components of the system—Poughkeepsie Light, Heat and Power Company, Newburgh Light, Heat and Power Company, and Hudson Counties Gas and Electric Company—into the Central Hudson Gas and Electric Company. The following year, the newly formed company sold 2,714 shares of common stock to the public, thus becoming the nation’s first utility to establish a policy of consumer ownership. Central Hudson continued to expand and consolidate, and by 1926 it had 75 companies operating within its system.

On December 31, 1926, the New York State government approved a consolidation that brought together the Central Hudson Gas and Electric Company with the Dutchess Light, Heat and Power Company serving the Rhinebeck area; the Upper Hudson Electric and Railroad Company serving the area north of the Catskills; and the Ulster Light, Heat and Power Company, the Kingston Gas and Electric Company, and the United Hudson Electric Corporation serving central and northern parts of Ulster County and the Catskill area. That New Year’s Eve, the Central Hudson Gas and Electric Corporation was born.

By 1930, Central Hudson’s growth had been slowed by the Depression, which continued to hit the utility hard during the decade of the 1930s. The corporation was forced to take on fewer acquisition and construction activities. In 1932, it reduced gas and electric rates by 9 percent and salaries of the officers by 14 percent.

During the tough economic times, an important development took place in the area of employer-employee relations. In 1934 the employees organized a committee, which, with management’s endorsement, declared in favor of adopting an Employee Representation Plan. Based on the principle of joint conferences between appointed representatives of management and the elected representatives of the employees, the plan was adopted by 767 of the 840 employees entitled to vote.

In the summer of 1937, however, rulings by the National Labor Relations Board (NLRB), prompted by the passage of the Wagner Act, made the plan null and void, since it had been formed with the corporation’s approval and participation. But on August 16, 1937, the Central Hudson Employees Association was legally and formally organized to represent its members in collective bargaining.

Some Central Hudson workers felt the employees’ association was not strong enough to deal with management. So a move to affiliate with the International Brotherhood of Electrical Workers (IBEW) was initiated. On December 8, 1944, 71 percent of Central Hudson’s employees voted to organize Local #320 of the IBEW. The corporation and Local #320 signed their first contract on April 24, 1945. The same day, under the auspices of the NLRB, another election was held to determine whether employees should be represented by IBEW or continue to be represented by the Central Hudson Employees Association. The IBEW won, winning 68 votes to the Employees Association’s 61.

After the bombing of Pearl Harbor in 1941, Central Hudson began to play an active role in the war effort. In 1942, for example, the corporation signed a contract with the U.S. War Department to provide electric service to the newly developed Stewart Airfield property in Newburgh. The following year, in an effort to meet increasing electric needs for wartime production in northern New Jersey, the utility constructed an electric transmission line from Pleasant Valley to East Walden.

During the last year of the war, Central Hudson announced its intention to discontinue steam service. The 77 remaining customers, however, protested, and New York state’s Public Service Commission (PSC) forbade the measure. Steam service continued until May 1953. The corporation paid half the costs that its former steam customers accrued in converting to another fuel, up to a maximum $1,000.

When the country emerged from the difficult economic conditions of the Great Depression and then World War II, Central Hudson began to once again advance and diversify its energy resources. From 1927 to 1947, the first twenty years of the company’s existence, there had been little increase in Central Hudson’s physical plant. The years from 1945 to 1954, however, were a boom period, the biggest expansion and construction program in its history. During these ten years, Central Hudson spent $73,853,000 on construction projects, building several electric transmission lines, including two major steam units and one hydro plant, and beginning the conversion of its gas system from manufactured to natural gas.

In 1950, Central Hudson’s Golden Jubilee year, the corporation acquired the Hudson Valley Gas Company. One setback came on November 25 of that year, when Central Hudson experienced the worst storm to strike the system since its inception. Service restoration work was not completed until December 2. At the peak of the storm, service was interrupted to over 55,000 customers—57 percent of the total.

The building boom that began in the mid-1940s continued throughout the 1950s and 1960s. Groundbreaking ceremonies for a plant at Danskammer were held on October 5, 1949, and by December 31, 1951, the first unit had begun operations; the second unit went into service on September 15, 1954. Earlier that year, the Neversink Plant at Grahamsville had gone into service on July 1, 1954. Danskammer Plant Unit 3 went into service on October 16, 1959. Some years later, in February 1967, Central Hudson bought the property of the Ellenville Electric Company, completing the 2,600 mile franchise area in which it operates today.

Financing the many projects could have put a financial burden on the corporation, but it was able to issue the required new stocks and bonds at the most advantageous time. The number of common shares, which had stayed almost constant at 1,500,000 since 1950, increased to 1,613,349 by the end of 1950 and to 2,633,456 by December 31, 1954. By 1966 the corporation’s total revenue exceeded $50 million for the first time—$41.744 million in electric revenue and $8.963 million in gas revenue. The following year, the construction of the Danskammer Unit 4 was completed. Unit 4, like the first three units, was designed and built to operate on coal. As early as 1961, Central Hudson had begun studying the feasibility of converting all or some of the units to oil-firing. In December 1969 a decision was made to do so. The following June, Danskammer Unit 4 began operating on oil; the other four units followed shortly after.

After completing the construction of the fourth Danskammer unit, Central Hudson undertook studies to determine the best forms of energy generation for the 1970s, including nuclear power. In the 1960s, the corporation had been active in developing and constructing the Enrico Fermi Plant, the utility industry’s initial development of a fast breeder nuclear reactor for electric power generation. In 1963 the Atomic Energy Commission had granted the Enrico Fermi nuclear plant an operating license for test purposes, and two years later it was licensed to generate at a full 200 megawatt capacity. But conservation groups began protesting Central Hudson’s involvement with nuclear power, and in September 1967 the corporation announced that it had canceled its plans.

The Central Hudson system continued to grow until 1973. In the ten previous years, the corporation’s electric system peak had increased 96 percent, from 323 megawatts to 632 megawatts. The corporation was projecting that the 632 megawatts would exceed 1,200 by 1982. However, that rosy projection was made before 1973, the year Central Hudson had to confront one of the most serious crises in its history. The OPEC oil cartel began to flex its collective muscle, raising the price of its oil. Oil prices skyrocketed, as did the cost of electricity—a 42 percent increase in 1974 alone. Consequently, the corporation’s electric sales dropped sharply. Net income dropped from $13.9 million in 1972 to $12 million in 1974. The corporation began reducing its workforce in 1974; although no one was laid off, retirees were not always replaced. In this way, the number of corporation employees bottomed out at 1,296 in 1978. Despite the oil crisis, Central Hudson continued to expand and build facilities. In the years from 1928 to 1974, it had spent some $43 million on its construction program; from 1975 to 1985 it spent $700 million.

Fighting the rising cost of imported oil was not the only battle on Central Hudson’s hands in the 1970s. As the decade came to a close, the corporation took on the State of New York and its Public Service Commission (PSC) in an important court case. The PSC had prohibited utilities from advertising in order to gain more business. Central Hudson argued that as a business like any other it had the right to advertise in order to sell more gas and electricity. It lost at all three levels of the New York state courts and appealed to the United States Supreme Court. In June 1980, Central Hudson won its case by a vote of eight to one.

During the 1980s, Central Hudson sought to adjust to the vast and complicated social, technological, and economic changes that American society was undergoing. Customers were now taking a more direct interest in the utility, especially in the way it served the community. Central Hudson recognized this change and responded accordingly. In 1980, for example, it conducted its first Energy Symposium for women at the Rosetón Plant. Some 1200 women representing 50 organizations in Dutchess County attended. The following year, the corporation organized a Consumer Advisory Panel made up of customers unaffiliated in any way with the company; in 1984, Central Hudson installed a computer-based Customer Information System, which processed consumer inquiries more rapidly and efficiently. Central Hudson also began to show a strong commitment to private sector development in the Mid-Hudson Valley and to the welfare of its customers. The corporation used its resources as well those of the Mid-Atlantic Regional Economic Development Council and other organizations to promote the quality of life in the region.